Reference no: EM132220815
Ruth Chris Case
Summary: The article talks about how Hannah was seeking to develop a new business strategy to expand Ruth Chris Steak House's operations to new foreign markets to increase the company's revenue.
Q1. The first thing that Hannah did to choose the potential countries where the business could be expanded was chosen a model out of the four models that include product development model, diversification model, penetration model, and market development model. The model choice that the involved management team chose was the market development model. This model was chosen because it was believed that it would increase revenue for the company since franchisee that was already spread internationally in Taiwan, Hong Kong, Canada, and Mexico had already proven to be profitable.
To get from 200 potential new markets to not more than 35 potential new markets, Hannah employed a market selection criterion that was based on several well-defined key success factors. One of the factors was the availability of beef-eaters in the potential new market under consideration. 17 countries were identified using this factor. Other important factors that were taken into consideration included affinity for US-based brands, on whether people have a culture to go out to eat in the market of interest, whether the disposable income is high in the market of interest, whether the market was densely populated, and whether it was legal to import the U.S. beef to the potential new market or target country. These were the variables that were the most important in Hannah's decision making.
Out of the analysis that Hannah did, however, by gathering information from a number of reliable U.S. government websites as well as other related websites, the variables that stood out to be most important to the decision-making process was the political variable. This was people since some countries could not allow the import of beef from the U.S., this was subject to change.
Q2. Other than using franchising as an entry mode, the two other options that Hannah considered include joint ventures and company-owned stores. If any of these options are to be taken into consideration, then the critical factors will change. If a joint venture is chosen as the mode of entry, one of the critical variables would be to find the right partner that Hannah's company can partner with.
The partner should right businesswise and should also be right in terms of compatibility with regards to management practices and cultural perspectives. The second mode of entry is with company-owned stores. This option would require the highest commitment from Hannah's company because the parent company will need to address all the critical variables with regards to the establishment of the new store in the foreign country. These critical variables would include financial factors, currency issues, economic factors, and the political factors of the foreign country.
Q3. There are several challenges that Hannah will encounter both internally and externally in opening new restaurants in foreign markets. One of these challenges concerns linguistic and cultural differences, especially if the company is expanding in a market that most customers do not speak English. These differences are very important because they have significant effects on interactions and relationships.
It would be necessary for the company and its employees to understand to host country's culture for it to be successful. The second set of challenges includes economic and political challenges. Policy changes and economic issues in the new markets can affect the business' ability to operate and make profits. Getting the right local employees to work for the company can also be a challenge in the foreign country because of issues such as lack of training.